TSC Ratings' Updates: Alberto-Culver
We've upgraded IntercontinentalExchange (ICE) from hold to buy, driven by its revenue growth, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Revenue rose by 11.7% since the year-ago quarter, though EPS decreased by 24%. Fiscal-year earnings increased to $4.19 from $3.38 in the prior year, and we feel that the company is poised for EPS growth in the coming year. The 77.6% gross profit margin is very high, though it has decreased from the year-ago quarter, and the 31.2% net profit margin significantly outperformed the industry average. The 0.2 debt-to-equity ratio is below the industry average, implying very successful management of debt levels, though the 0.03 quick ratio demonstrates a lack of ability to pay short-term obligations. Return on equity has decreased slightly from the year-ago quarter.
We've upgraded Triquint Semiconductor (TQNT) from sell to hold. Strengths include the company's largely solid financial position with reasonable debt levels by most measures and revenue growth. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
Triquint's 2.5 quick ratio is high and demonstrates strong liquidity. Revenue increased by 7% since the year-ago quarter, though quarterly EPS declined steeply year-over-year. Fiscal-year earnings also decreased, to negative 10 cents a share from 17 cents a share in the prior year. However, the consensus estimate suggests that the company's two-year trend of declining EPS should reverse in the coming year. Triquint's gross profit margin is 29%, a decreased from the same period last year. Its -13.2% net profit margin is significantly below the industry average. Net income fell from $4.5 million in the year-ago quarter to -$15.6 million in the most-recent quarter.We've upgraded Meridian Bioscience (VIVO) from hold to buy, driven by its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Meridian has no debt to speak of, and it maintains a quick ratio of 5.7, demonstrating an ability to cover short-term cash needs. The 66.4% gross profit margin is rather high, having increased from the year-ago quarter, and the 21.8% net profit margin above the industry average. Net operating cash flow increased by 55.2% to $6.5 million compared with the year-ago quarter. Quarterly earnings were flat year-over-year, and Meridian increased its fiscal-year earnings to 74 cents a share vs. 67 cents in the prior year. We feel that the company is poised for EPS growth in the coming year. Revenue fell by 8.2% compared with the year-ago quarter. All ratings changes from June 19 are listed below.
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